Prime Consumers Under Increasing Financial Strain, According to Latest Reading From Consumer Sentiment Tracker
July 21 2020 - 4:26PM
Business Wire
A new study released today by Elevate’s Center for the New
Middle Class (CNMC) reveals that prime consumers (those with credit
scores of 700 and above) are exhibiting significant financial
weakness due to the coronavirus pandemic while conditions for
non-prime consumers, a population of approximately 150 million in
the United States, seem to be stabilizing.
The report, which surveyed over 1,000 prime and non-prime
Americans during the month of June, reveals notable strain among
prime consumers. In particular, layoffs among prime consumers or
their spouse/partner have soared 78% from pre-COVID levels. The
biggest single-month increase in this metric occurred in June,
jumping from 30% to 41%, or 37%. This is the first time in the 18
months since CNMC has been tracking data that prime consumers have
been laid off at a higher rate than non-prime.
“This is a trend worth watching closely as it suggests that
American households may be under more duress than is commonly
thought,” said Jonathan Walker, Executive Director of the CNMC. “If
the pandemic continues to worsen, we may see consumers with
excellent credit slide out of prime status due to job loss,
unexpected medical bills, or a creeping debt load.”
Non-prime consumers, or those with credit scores below 700, are
not showing a corresponding erosion in sentiment. In terms of job
security, 80% of non-prime consumers reported feeling stable in
their employment in June, levels that haven't been reached since
early February and a four-point increase over the one-year average
of this metric. The level of worry among prime consumers, on the
other hand, has returned to levels last seen in April.
Despite economic conditions that remain unstable and
challenging, both prime and non-prime consumers are exhibiting
fiscal prudence.
“While prime consumers are experiencing relatively more
pandemic-related financial weakness than non-prime consumers,
household income for both groups has declined over the last month
and the percentage of people with more debt than savings is
decreasing,” said Walker. "This suggests a commonality between the
two groups as everyone tightens their belts and prepares for
continued economic volatility.”
Link to full report:
https://www.newmiddleclass.org/non-prime-tracker-june/
About The Research
CNMC's sentiment research began in September 2018 and compares
the responses of prime and non-prime American consumers on a weekly
and monthly basis via online questionnaire. Respondents are 16 to
64 years old with at least some responsibility in managing their
household’s income; students and retirees are excluded.
About The Center for the New Middle Class
Elevate's Center for the New Middle Class conducts research,
engages in dialogue, and builds cooperation to generate
understanding of the behaviors, attitudes, and challenges of
America's growing "New Middle Class." For more information, please
visit: newmiddleclass.org.
About Elevate
Elevate, together with its bank partners, has originated $8.4
billion in non-prime credit to more than 2.5 million non-prime
consumers to date and has saved its customers more than $7.0
billion versus the cost of payday loans. Its responsible,
tech-enabled online credit solutions provide immediate relief to
customers today and help them build a brighter financial future.
The company is committed to rewarding borrowers’ good financial
behavior with features like interest rates that can go down over
time, free financial training and free credit monitoring. Elevate’s
suite of groundbreaking credit products includes RISE, Elastic, and
Today Card. For more information, please visit
http://www.elevate.com.
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Investor Relations: Solebury Trout Sloan Bohlen,
817-928-1646 investors@elevate.com
or
Media Inquiries: Solebury Trout James McCusker,
203-585-4750 jmccusker@soleburytrout.com
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